I admit, I'm a bit shellshocked

[MichealKnight]

In my previous life - I was never ever "long" in paper assets. I certainly had phases where I took interest in it - and I panic sold when things were bad - only to see everyone else ride it back higher than ever. Then I decided I'd only buy during crashes - and hold on MAX till 20% profit. My unscientific rule was that if the late-night comedy hosts did stock market jokes - BUY. "But you have to pay taxes!" - lol, yeah, I wanted to pay it - that meant I made money. I did *not* want to "Dollar Cost Average" and 'Harvest Tax Losses" - I didn't like celebrating losing money and making it sound cool. But those were the days I made lots of money.

46 and retired 1.5 years. Decided to LTBH. Last year- *3* times I was down and I didn't do a thing. Each time- came back better. Then - today. My goodness it's bad and worse yet- - it might even get worse between funny-money stock prices, hyped up "strong buy!" "intrinsic value!" shouts by people who never ran a lemonade stand - not to mention the Ruling Class seeming to want to start WW3.

Luckily my 4 years expenses in cash - is fine. DD starts college in 4 years and I also have 1st year college money in cash. So far - my rental homes continue to appreciate and rents are coming in. But I've really screwed the pooch. Nope, scratch that. I've made sweet love to a pooch, videotaped it and let my Mom watch that's how bad I feel. I'm down 11% for stocks. Been trying to get hold of my gut, and plot a course forward:

1.)Shed the few crap-quality stocks - keep the high quality stuff and hope history repeats itself for the zillionth time and I see recovery. Also realize - that even if things recover - it'll be from TODAY'S cost basis - meaning my total returns will be lower because of the 11% I lost now.

2.)Start over. Pretend it's my 1st day RE'd. Instead of having 35+ stocks and ETFs and funds...... just focus it down to a few things.


3.)Tap my cash. 4 years expenses in bank. IF S/-500 goes somewhere between 3800-3600.....and P/Es are even lower than today..... maybe take 2 years of the cash.....put it in those stocks. If there's a 10-12% recovery.....SELL and put the cash back in bank but at least I made up some losses. It's not risk free.....but this would mean buying. Apple in the 120's, QQQ in the 270s.....not risk free, but my goodness.... I would hope much of the risk is taken out.


For the next 4 years - if I average 5.5% nominal returns..... I'm fine in terms of where I want to be at that time.

SDY: 2.3% dividend. Real companies. I'm thinking 3-4% a year appreciation doesn't seem like an unrealistic thing.

BRK.B: I gotta believe that when Wally and the Beaver take over for Warren Buffet - it'll still be a solvent company of real profits and cash. Averaging 5-6% yearly..... hopefully realistic?

KO, MCD, PG, PEP - seem to have shareholder friendly histories right up to today. Again - - 2-3% dividends - - I would hope for another 2-3% yearly appreciation.

Maybe a little VZ and MO too.

The one sexy thing I'd consider: Putting 5% into Apple and Google. I just can't imagine that they don't have new products and services on the way.

But that's it. Set it, forget it, eat burgers and play online scrabble. (Party animal)


3.)Accept that I'm Crunked. It's *very* hard to put together the business(s) I had before. And frankly not sure if I want to put my life savings at risk anymore. This would mean getting a job in my old industry. Hurts pride in that I used to be the owner for 20 years and now I'd be reporting to someone. On the low side I'd make 70k, high side - 150k. No college degree here so it's not like there's MegaCorps that I could go to. As a side note, I like being home. I feel it's good for my kids, especially special needs son - -- but I also don't want to say "hey kids, no college money but at least we spent time together"


I would appreciate any questions, comments, suggestions, or even insults just to spice it up a bit. . Thanks for reading.

 

[copyright1997reloaded]

11% loss is nothing.

Go for a walk. You have 4 years of expenses in cash plus college $ in cash, be thankful for that.

ETA: I've been spouting on here for "a while" that inflation was going to be a problem. I also have been conservative in term of how much cash I have set aside, plus gold/silver plus things like real food supplies. None of that doesn't mean that I haven't been punished as the market has fallen, including things I've bought because I thought they were bargains ... only to see them go down at an even faster rate. Having said this, none of us can truly predict how far it falls, or the fallout of it, or when it turns, or even whether we will see to live the next day. So, I repeat...go for a walk.

 

[Aerides]

stop watching the financial news. I wouldn't know if I'm down 5%, 11%, or much more. I'm not looking. Been there, done that. All it makes you do is stupid stuff.

I don't know what Crunked means, but google says it's probably not how you meant it.

Unless you retired with substantially less than you should have had, stop looking.

 

[street]

Your good for the long haul if it lasts that long. You will be just fine and hunker down and ride out the storm.

 

[Midpack]

11% loss is nothing.

Go for a walk. You have 4 years of expenses in cash plus college $ in cash, be thankful for that.

+1. If you're thrown by an 11% pullback in equities, you might want to reassess your risk tolerance/asset allocation. That is going to happen, as it has throughout the history of the US, and sometimes it will be much worse - temporarily. Every pullback in the past, no matter how bad, led to a greater rally for those who just waited.

 

[Dash man]

The money we have set aside for down markets is just for that. I don’t want to try to catch a falling knife and put my safety net into the market trying to catch the bottom. We have plenty in stocks and will be patient until they go back up. We’re moving some cash into short term treasuries and munis, but nothing riskier. We’re not hit too hard by inflation since we own our homes outright and gasoline use is minimal. Natural gas prices are locked in through Sept 2023 and electric for two years. Property taxes will likely go up, but we can adjust for that. Food prices are what hits us the most.
We are taking advantage of the market drop for Roth conversions for our long term benefit.
Don’t panic, be wise

 

[savory]

I share some of your anxieties. One reason I took the pension.

I remember when Romney was running for president and they reported his financials. He went from $17 to $11 million if memory serves. I thought what a great problem to have. Going from a lot of money to a lot of money in a down market situation. That became my goal. So the loss is there. But so is enough money, so far. Right now, I am still expecting a bounce but when?

 

[Freedom56]

Instead of panicking, make a shopping list of quality company assets you want to buy. The world is not going to end. In my case I don't invest in equities as capital preservation and income are my investment objectives. I personally believe the bubble in equities is only starting to deflate and still has a long way to go. I only look at companies from the point of view of interest rate coverage of the debt they issued and the risk of default for the term of the debt I'm buying. As the year progresses I will buy some high quality short to medium term corporate notes and investment grade preferred stocks at yields not seen since March 2020. I still see no bargains out there but the yields are improving and the spreads between treasuries and corporate notes and preferred stocks are expanding. CD and Muni bond yields are still too low. However, the only downside to buying individual bonds, CDs, treasuries, and Muni bonds now is locking in at lower yields and foregoing any yield improvements in the future when the fund selling kicks into high gear. This year we have continuing rate hikes that the market still has not fully priced in, high inflation, a mentally unstable dictator waging an immoral war or "special military operation", and tax loss selling season approaching. These are not reasons to rush into the market with fresh cash, but at some point you have to take the emotion out of investing and look beyond the negatives and load up the truck with undervalued assets.

 

[W2R]

I agree with the others who are saying to calm down, hang tight, stop watching the market, and wait it out. These are all paper losses and generally don't become real and locked in, unless you sell low. When all this market volatility is over (not now!!), you might want to adjust your AA to something you can more easily tolerate when the market drops like this.

As for working for someone else when you are 46, well, that is not a terrible or unusual situation (even for many very intelligent people! ).

 

[target2019]

Sell a loser, offest with a winner. Take the cash and buy what's appropriate for the account. Early this morning someone said, "Find the right balance between growth and value."

individual companies -> Passive Index

 

[REWahoo]

OP, if you and everyone else on the ropes sell everything that will hasten getting to a bottom. Then we can get this market unpleasantness behind us and start the recovery.

Or you could suck it up like many of us do and wait it out, knowing the market will almost certainly go lower and stay down longer than any of us would like. Well, unless this time is different.

 

[Phroig]

You made a choice to hold four years’ expenses in cash for peace of mind. I’d leave that cash alone. This is a great time to make any portfolio adjustments you’ve been wanting to make. (Silver lining!) Whittling down the portfolio to index or dividend funds and a few quality stocks makes a lot of sense.

 

[W2R]

op, if you and everyone else on the ropes sell everything that will hasten getting to a bottom. Then we can get this market unpleasantness behind us and start the recovery.

Or you could suck it up like many of us do and wait it out, knowing the market will almost certainly go lower and stay down longer than any of us would like. Well, unless this time is different.

+100000000

 

[latexman]

So you retired 8 months after the March 2020 crash, which was a 30-40% drop. What did you do then to allow you to retire? I'd say you almost have experience this time. Tighten the belt, use your cash. Thats SOP during these wild and crazy times.

 

[freedomatlast]

I'm wondering what OP expects. Year over year increases in the market forever? Periodic downturns in the market are normal and should be expected. Most of us have lived through several. Stop checking your balances and execute your plan of not selling equities at a loss to live on in a down market. That's what your 4 years of cash is for. Go for a walk and count your blessings.

 

[calmloki]

We are down 15.5% from our overall high. Worth noting that even though that is true, VTI is still $4 higher than it's 52 week low. Longer view is good.

 

[MichealKnight]

hi

So you retired 8 months after the March 2020 crash, which was a 30-40% drop. What did you do then to allow you to retire? I'd say you almost have experience this time. Tighten the belt, use your cash. Thats SOP during these wild and crazy times.

My retirement timing was zilch to do with stocks. I think I was maybe 5% vested in stocks in those days. It was savings+ selling my business.

 

[tulak]

I'm wondering what OP expects. Year over year increases in the market forever? Periodic downturns in the market are normal and should be expected. Most of us have lived through several. Stop checking your balances and execute your plan of not selling equities at a loss to live on in a down market. That's what your 4 years of cash is for. Go for a walk and count your blessings.

+1. Go look at a chart of yearly S&P500 returns.

The last two years have been great, even after this current drop. No way I’d think the S&P500 would be at 4000 back in 2020.

Personally, I like a good downturn. It shows that the markets are working. There are too many overinflated assets and the last decade has left the impression that markets can go only up, regardless of fundamentals. Significant downturns give me the feeling that some sanity is returning to the markets. It’s also a great buying opportunity.

 

[Hank]

I suggest you drink heavy...

 

[NW-Bound]

11% loss is nothing.

Go for a walk. You have 4 years of expenses in cash plus college $ in cash, be thankful for that...

+1

I and other posters have been through worse. How 'bout 50% loss of the index? Twice in the last 20 years.

Besides, with inflation running near 10% year-over-year, is cash as safe as you think?

Yes, the frothy stocks will get hammered harder than the market, and many will go bankrupt. If you don't have any of those, just tough it out.

I went through the last 2 severe downturns, and now have more than I spend. Heh heh heh...

 

[Dtail]

Just relax. Why not run Firecalc based on your current portfolio, as if you are just retiring now. You will probably receive good results and calm down some.

 

[latexman]

My retirement timing was zilch to do with stocks. I think I was maybe 5% vested in stocks in those days. It was savings+ selling my business.

Oh, okay. Your first market spincter-tightening adventure. You should be sleeping well with 4 years of cash. The average duration of a market crash is usually < 1 year. Good luck!

 

[Car-Guy]

stop watching the financial news.


All it makes you do is stupid stuff.

For investors, +100

 

[Trailwalker]

Volatility is part of the deal. Know that there are huge swings from time to time and play the long game. Four years cash? You've got this.

 

[Chuckanut]

Just relax. Why not run Firecalc based on your current portfolio, as if you are just retiring now. You will probably receive good results and calm down some.

+1

Dtail, that is a rather interesting idea. Run a calculator using the current portfolio. Why didn't I think of it first? It makes a lot of sense, puts things in perspective and hopefully keeps one from panicking.

A few more suggestions like the one above, and I will have to put you on my list of dangerous radicals who infest this site.